Nigerian Inflation Quickens to 21-Month High on Food Costs

(Bloomberg) --

Inflation in Nigeria quickened to a 21-month high in January as food shortages caused by border closures continued to drive up the price of staples.

Consumer prices rose 12.1% from a year earlier, compared with 12% in December, the Abuja-based National Bureau of Statistics said in a report published Tuesday on its website. That matched the median of six economists’ estimates in a Bloomberg survey. Costs rose 0.87% in the month.

Key Insights

• The monetary policy committee’s ability to raise interest rates to contain inflation is hampered by slow economic growth. Last month Governor Godwin Emefiele raised the amount of money banks need to deposit at zero interest with the central bank to mop up excess liquidity. He said excess liquidity was partly to blame for the high level of price growth.
• Food inflation accelerated to 14.85% in January, the highest level since March 2018. The swell in food prices shows no sign of abating after President Muhammadu Buhari shut land borders in August to stifle smuggling of rice and other products.
• A 50% increase in the -added tax rate and upcoming increase in electricity tariffs will likely keep inflation above the 9% upper end of the central bank’s target band this year.

©2020 Bloomberg L.P.